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Dollar’s best month since 2015

“The secret of change is to focus all your energy not on fighting the old but on building the new.” — Socrates

 

 

HEADLINES

 

  • Dollar on track for best month since 2015
  • Gold gains over 1%, but set for monthly decline
  • Oil up for fourth day, supply fears outweigh China lockdowns
  • Wall Street drops as investors dump Amazon following report
  • Seasonal trends could be a drag on a stock market that needs a rebound
  • GBP/USD to test 1.24 with continued weakness below this mark a possibility – Scotiabank
  • GBPJPY Near Term: Upside favored

 

 

FOREX

 

 

Dollar on track for best month since 2015

 

 

The dollar slipped from 20-year highs against a basket of currencies on Friday but remained on track for the best month in seven years as concerns about the global economy and a hawkish Federal Reserve bolstered demand for the greenback.

The dollar hit a 20-year high against the yen on Thursday, as the Japanese currency was hurt by dovish Bank of Japan policy. It also hit a five-year high against the euro, which has dropped sharply since Russia's invasion of Ukraine, with investors concerned about Europe's energy security, inflation and growth.

 

 

COMMODITIES

 

 

Gold gains over 1%, but set for monthly decline

Gold prices rallied 1% on Friday after the dollar retreated, but the metal was set to end the month lower on bets of aggressive policy tightening by the U.S. Federal Reserve.

Gold is considered a hedge against soaring inflation and uncertainties, but rising interest rates dampen its appeal by increasing the opportunity cost of holding the non-interest bearing asset.

"Gold market has seen consistent sell-off in the past weeks as the dollar rallied. Currently, the dollar index has declined, which is lifting gold prices," said Edward Meir, an analyst with ED&F Man Capital Markets.

Oil up for fourth day, supply fears outweigh China lockdowns

Oil prices rose for a fourth day on Friday as fears over Russian supply disruption outweighed the impact of COVID-19 lockdowns in China, the world's biggest crude importer.

In fuel prices, U.S. heating oil futures, a proxy for diesel prices, climbed to $5.65 per gallon during the session, an all-time record. On Wednesday, Russia cut gas supplies to Bulgaria and Poland.

Russian oil production could fall by as much as 17% this year, an economy ministry document seen by Reuters showed on Wednesday, as Western sanctions over Russia's invasion of Ukraine hurt investments and exports.

 

 

STOCKS

 

 

Wall Street drops as investors dump Amazon following report

 

 

Wall Street tumbled on Friday at the end of a volatile week, as Amazon slumped following a gloomy quarterly report, and as the biggest surge in monthly inflation since 2005 spooked investors already worried about rising interest rates.

Downbeat results and worries about aggressive monetary policy tightening by the Federal Reserve have hammered megacap technology and growth stocks this month.

Year to date, the S&P 500 has lost 12%, marking the index's worst four-month start of a year since 1942.

 

 

Seasonal trends could be a drag on a stock market that needs a rebound

 

 

Investors will be looking for a reprieve after the worst month for stocks in more than two years, but the calendar might not be too friendly from here.

The big drawdown comes on the eve of a historically weak period for stocks, with the “sell in May and go away” mindset officially beginning next week. According to the Stock Traders Almanac, an investor who held the Dow Jones Industrial Average between Nov. 1 and April 30, and then switched to fixed income for the next six months, would have produced solid returns with reduced risk for more than seven decades now.

That seasonal weakness can be especially pronounced in midterm election years, according to Sam Stovall, chief investment strategist at CFRA.

 

 

ANALYSIS

 

 

GBP/USD to test 1.24 with continued weakness below this mark a possibility – Scotiabank 

 

 

“The bank is likely to hike by 25bps but it looks set to accompany this with a cautious economic outlook and implicit guidance that market pricing seeing 150bps in hikes by year-end is significantly out of line – as this would result in a notable undershoot in inflation.

“There’s very little possible upside for the GBP from this meeting and considerable downside as the bank strikes a much more neutral to even dovish tone than markets are reflecting in rate bets.”

“A firm and longer-lasting drop under 1.25 seems likely and with it a test of 1.24 with continued weakness below this mark also a possibility.”

 

 

CHART

 

 

GBPJPY Near Term: Upside favored

 

 

Technical View: Long position above 161.3. Target 164.25. Conversely, break below 161.3, to open 160.3.

 

 

Comments: The pair remains supported. Further advance favored.

 

 

Source: Trading Central 

 

CALENDAR

 

 

*Times in GMT

 

 

Source: FX Street Economic Calendar

Footnotes
https://www.reuters.com/business/dollar-towers-two-decade-high-growth-woes-fed-outlook-2022-04-29/
https://www.reuters.com/business/gold-up-headed-worst-month-seven-us-rate-hike-bets-2022-04-29/
https://www.reuters.com/business/energy/oil-eases-china-lockdowns-weigh-demand-outlook-2022-04-29/
https://www.reuters.com/business/futures-fall-amazon-apple-results-disappoint-2022-04-29/
https://www.cnbc.com/2022/04/29/seasonal-trends-could-be-a-drag-on-a-stock-market-that-needs-a-rebound.html
https://www.fxstreet.com/news/gbp-usd-to-test-124-with-continued-weakness-below-this-mark-a-possibility-scotiabank-202204291349
 

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